3 Minute Gold News

A synopsis of an interview with Jim Rickards, New York Times bestselling author of The New Case for Gold, The Death of Money, Currency Wars and The Road to Ruin, by Max Keiser of The Keiser Report.

Jim is the editor of Strategic Intelligence, Chief Global Strategist for West Shore Funds, former general counsel for Long Term Capital Management, and a consultant to the U.S. Intelligence community and U.S. Department of Defense.

by: Elaine Diane Taylor

Topics:

Jim Rickards

NAFTA should be fixed as opposed to abolished. It’s costing Americans too many jobs, and employment is very close to the top of President Trump’s agenda.

TRADE

Bi-lateral Trade (trade agreements between two countries instead of between groups of countries) is the future of trade for the next four or eight years. We’ll see bi-lateral deals all over the place.

Trump is all about the art of the deal, but when you have 15 nations negotiating at once there’s too many moving parts and too much compromise needed to get what you want.

Trump’s negotiating style is more of “I give you something and you give me something” between two parties, so we’re going to see more of the bi-lateral dealing like we just saw with Japan.

INFLATION

All of the new jobs and deals being created become inflationary sooner or later.

The U.S. is $20 trillion in debt.

They don’t have to pay off the whole debt, but in order to make it sustainable they have to roll it over (take out another loan to pay off the first loan when it comes due, which might have a different interest rate or conditions).

Right now the U.S. is on a non-sustainable path because debt is going up about 3% per year while the GDP growth has only been about 2% per year. When you grow your debt more than your income you’re on the path to becoming Greece.

The way out of that non-sustainable situation is with inflation.

(This is why the Fed wants inflation — the debt amount is the same number of dollars but the value of the debt is less because each dollar is worth less. So they pay back less value than was agreed on, but it’s the number in the contract. Not very fair, and that’s a big reason why no one wants other countries to manipulate their currencies.)

The problem is that the Fed has been trying to get inflation for 8 years and they’ve failed.

They need the inflation to pay their unsustainable debt so they’ll try harder, and won’t quit until they get it.

Trump wants a weaker U.S. dollar and he has vacancies to fill on the Fed’s Board of Governors. So you’ll see a weaker dollar with lower interest rates.

There will probably be a combination of monetary ease and fiscal spending.

Another name for that is “Helicopter Money”. (I cover this in the song “Helicopter Ben”).

Doing “Helicopter Money” will get the inflation.

The flaw in QE has been velocity. The Fed model believes that velocity (how fast money is spent and moves around) is a constant. But the Fed is wrong and velocity is not constant.

You can have a base money supply of $4 trillion but if your velocity is zero then your economy is zero.

Velocity is psychological and they haven’t cracked that yet. (People don’t spend when they feel insecure about the future. They save it. Or they pay off debt.)

The Fed believes all they have to do is print money to get the inflation they want. That theory is garbage because velocity is not constant.

(Max believes that velocity is psychological, but that the current level of velocity is also by design because bankers individually profit from QE, so they want more. MOAR! ;-) )

TAX

The U.S. has a much higher corporate tax rate than most countries, and other countries get a subsidy when they export, so Trump wanting to lower corporate taxes makes sense.

EURO

The euro is like the roach hotel — you can check out but you can never leave. No one is getting kicked out of the euro. Jim thinks that Scotland will leave the U.K., and be the next member to join the European Union.

You’ll see a stronger euro over the next six months but not in the next two weeks, because there’s too much uncertainty about the France and Netherlands elections.

GERMANY

The mother of all elections is Germany. Jim believes Angela Merkel will win, and that she’ll get a lot of help from Mario Draghi, President of the European Central Bank.

Germany wants a stronger euro because it doesn’t want inflation. (Weak currency value = inflation.) The only way they’re going to not get inflation is if Draghi tapers asset purchases (slows down on the spending) and raises interest rates from the current negative level. (The opposite of what the Fed wants.)

Jim thinks Draghi will do those things by the summer to help Merkel’s election chances.

Germany is an export powerhouse, not because of a cheaper currency, but because of things like technology, innovation and a good education system.

Germany is taking over Europe by monetary and not military means.

They want a strong euro because it’s anti-inflationary.

CHINA

Trump sees America losing to China right now in terms of trade.

In years past China manipulated the yuan to keep it artificially low, but for the past year the Chinese have been trying to keep the value of the yuan up.

Trump wants a cheaper yuan (it’s artificially high right now). He may get more than he wishes for see a yuan ‘maxi-devaluation’ of 20-30%. That might throw global markets out of whack, like the last time China devalued their currency in August 2015.

GOLD

Both bond yields and gold are going up at the same time right now. When you see correlations like this it’s not because of a financial panic — it’s because of a fear of inflation.

The Fed is expected to raise interest rates in March. (Remember, they want inflation.) Jim thinks they’re going to tighten (raise rates) at the wrong time and that it’ll slow the U.S. economy down.

When that happens they’ll have to back off and bring down the interest rates again, so we’ll end up with a rally in bonds.

Everything left to itself falls apart. So we use facts to make decisions on how we’ll use our time, our energy and our resources to look after what we love.

That part’s easy.

The part that’s less easy is when the things we thought were facts are in fact not true.

The building up of a system is like a new group that gets together with a common goal. Each person compromises their own best interest for the good of the group, knowing the group’s success means they’ll be better off than going it alone.

All systems go through cycles like the seasons: spring, summer, fall and winter.

When a system is falling apart and heading into the winter season you can see some individual members begin to look after their own best interest before the good of the group. At the time in the cycle where group strength is needed to keep the system going, there are those who will loot before the lights come on, and before everyone sees a storm coming in. The less trustworthy leave you hungry.

They don’t care. You’re not in their closed system. They moved to a new group.

Those with power will be the first to get information and the first to take action. If they love the group they will defend it. If they see the group as a lost cause they will prepare for its demise. If they know there’s a catastrophe on its way, and that not all parts can be saved, they will prepare themselves and those closest first.

So here’s the question:

If a nation is a closed system, which is it, and you see individuals with power look after their own best interest over the good of the group, which they are, what is the wise next step for you as an individual and for you as a member of the group?

In order to make a good decision you have to have correct information. How do you get clear and true information?

What happens if you cannot trust your sources? On top of that, what if different sources of information are telling you opposite things?

Remember that everyone is biased.

News reporting is biased because people are biased.

News companies are owned by shareholders. Who are biased.

When people are afraid they do not share resources because that thing they are afraid of may steal or use it against them. Information is a resource. Facts can help you or an opponent. If a storm is coming and you believe the person before you created the storm that will hurt your family, you’re less likely to show them the way to the storehouse of winter coats.

When a calamity is on its way someone might lie and tell you there is no storm, to hide facts while they personally prepare. They may say the weather report is fake, or there are no coats available. They may, on the other hand, lie and tell you there’s a storm coming when there isn’t because they have coats to sell. Not fair, not nice and not inclusive. But if they fear a storm then they’re protecting information to protect their closed system. If they fear bankruptcy they are protecting their profit.

People under stress do not always look after the best interest of the group. They’re not always kind or truthful. They will withhold information or just tell a part.

I’ve had a force coming at me at full speed and I didn’t want to believe that people could be biased against me. I wanted to believe people are good and fair, it took time and a few occasions of shock to realize that people are both good and bad, fair and unfair, depending on how safe they feel, who is in their closed system, and what they can gain from you.

Most news events are positive for some and negative for others. The reporter will use words that explain an event in terms of a winner and loser. It’s subtle and it’s there. We all use it because we’re all biased.

Bias is not bad. You must have a sense of who you are not in order to know who you are. Everything that is different is not an enemy — it’s just different.

A thing is a ‘thing’ only as it is compared to another ‘thing’. :)

If there was no differentiation then all would be one.We can each desire to be part of a “oneness”, like God before any creation, but that only happens when each part agrees, and we do not all agree on…well, anything really.

To say someone is ‘inclusive’ in itself must mean there is someone who is excluded, otherwise there would be no label of inclusive. We all are inclusive to those we are in agreement with, and that’s okay. Just realize there are others who are also inclusive to those they are in agreement with. They’re just as inclusive, just with other people.

Agreement comes with trust. Trust comes from believing something will happen. Most often because we have seen it happen before, and sometimes because we trust someone who tells us something will happen.

News companies, big and small, want to be that someone. Just know that everyone is biased and make sure you know what that bias is. Who the owners are and what they believe.

Mainstream news? Biased.

Alternative news? Biased.

Blogs? Biased.

Songs? Biased.

Cool neighbours? Favourite authors? Friend’s cats? Biased.

The answer is not censorship of media, and it’s not social group force to shut down freedom of the press (both mainstream and alternative). A view you believe is dangerous and can’t be allowed is just how another group feels about your views. Hard to see but that’s it.

The answer is more news from more sources that declare their bias and argue their point with reason, history and rational statements of fact. Opposing views need to be able to defend their views and state their facts.

Listen to media knowing what their bias is.

Listen to different biases. Do your own research. Understand your own wonderful bias and connect your own dots.

But not every moment. Everything isn’t news. Sometimes you just sit on the chesterfield and play your guitar because you love it.

Elaine Diane Taylor~

February 15, 2017

Jim Croce’s ‘Time in a Bottle’, just laying back on the chesterfield in Vancouver, Canada, last month. Not for sale at this time.

The Greek bank holiday and long lines to get a few euros for the day. Debt deals behind closed doors. The media telling us what opinions to have. China building islands in the South China Sea and claiming all the international waves. More dealing to come. More standing in line for those who owe. Who owes? There’s a long line of nations in debt and this is far from done.

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Preparing for the Fall live boutique album available on iTunes — featuring Wag the Dog, Black Swan Dive, American Pie and Gods of the Copybook Headings.

The copybooks of the early 1900s gave us all the wisdom we need. The sayings that were copied are the truths, the gods, of our world. All the empires who followed the gods of the marketplace instead have fallen, and there’s terror and slaughter when the gods of the copybook headings return. The lyrics are by Rudyard Kipling. One of my gurus.

See the bankers wave their Wall Street wands and conjure piles of paper green. Naked short selling is like betting that your neighbour’s house will burn down. But in this scenario it happens to burn down. If the bankers win then we lose the whole world as we know it. I wrote this in 2009, with a lyric “A little grease (Greece) is floating out to sea, and little pigs (Portugal, Italy, Greece and Spain) are bobbing up and down, they’ll send a storm and we’ll see, when the tide goes out who’s naked on the beach“, and it’s coming on now. The world is changing as we know it.

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Nothing on this site is intended as individual investment advice. We’re all watching which way the wind is blowing.